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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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01:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

China 17, Us 10, U.s. 7, S&p 7, Aflac 6, Scott 6, Apple 6, America 5, Tim 4, Europe 4, David Katz 3, Steve 3, Caroline 3, Schwab 2, Ben Bernanke 2, Steve Liesman 2, Timothy Geithner 2, Pentagon 2, Obama 2, Ennis 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    January 11, 2013
    3:00 - 4:00pm EST  

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with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com. forget toys. mcdonald's and the uk are now putting books in happy meals called happy readers and was started because of a third of british children do not own a syringeal book. can you believe that, brian? >> what? >> a third. if this program keeps up mcdonald's expects it will be the biggest kids' book distributor in the uk by 2015. good for them is what i say. >> there you go.
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let's end it on a happy note. have a great weekend, everybody. thanks for watching "street signs." >> "closing bell" is coming up next. see you monday. hi, everybody. happy friday. welcome to the "closing bell." final stretch for the week. i'm maria bartiromo at the new york stock exchange. s&p 500 today struggles to close at the five-year high it hit yesterday. final hour of trading decides what happens. >> nice to see you again, maria. i'm scott wapner in for bill griffith. back on monday. we are tracking the market. also following several other big stories at this hour. forget pay day. this is tax hike day for america. >> uh-oh. >> nearly every working american saw the government take more money out of their paychecks today. how that fallout could shape the debate on spending cuts versus higher taxes. then wells fargo kicking off the banks and this earning season. its cfo here to talk to us first, and the business of the fluff as it sweeps across
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america. running low on vaccines and tamiflu. >> the dow jones industrial average really trading fractional moves up, up just a fraction as you can see there. very much a slow move for this major average on this final day of the week, 13,474 last trade on the blue chip average. nasdaq composite higher, though barely by two-thirds of a point as you can see there. 3122 and the s&p 500 looks like this. with a similar chart pattern, though fractionally negative on the day. well, the standard & poor's 500 inching towards a froese five-year high again. is it time to put new money to work in this market right here? >> in today krebl exchange michael pento from pento portfolio strategies and david katz ma from matrix and michael kajino of family funds and our very own rick santelli joining us right now. michael pento, i'm going to go to you first. you've been overly negative on the market, yet you still have
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the climb of the wall of worry, and now we find out that we had the second best weekly inflow into equity funds ever. what does that tell you about where investors think this market is going? >> i've been extremely negative on the economy, and i know i'm going to be right in the long run, but we went long, heavily long in early january because we realized woe live in a world dominated by kamikaze keynesian counterfeiters and they have mad to up the money supply in japan, europe, the united states. for instance, the u.s. money supply is measured by m 2 and it's growing at an 12% annualized rate. not going to bonds, not stocks. we're very long the stock market here. >> rocking the "miami vice" look today. like that. >> long the stock market, michael, but you think the economy is going to have trouble so basically you're looking that
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the market trading on free money. >> listen, look at japan. their debt-to-gdp it 237%. their manufacturing is falling. industrial production is falling. who cares? the market's up 23% in the last two months because shinzo abe has grabbed their central bank by the throat and said start printing and they have done it to the tune of over 100 trillion yen. >> so rick, the stat that i brought out at the very top here, this tremendous amount of money flowing into equities, second biggest ever on a weekly basis, does that tell you that we're about to see the great exodus from bonds into stocks? >> it could be the largest sucker trap in history because, you know, i look at that 20-year chart last hour with mandy and some people us testing five-year highs, i get that. a technician might look at it and say it's a big to be top. it's a five-year double top so you need to be careful. i'd almost be more apt to buy a
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breakout on a dip should we get above some of the historical levels than buy at the top when we test it and i agree with mr. pento. the problem is japan has been in this game a long time, and, unfortunately, if you're looking to trade the stock market based on economic fundamentals i think that you could be right and run out of money and go broke before the trade works. >> what do you see about all of that, david katz? how are you allocating capital here? >> wow, we disagree with a lot of things that are said or what's going to be driving the economy or the market. we actually think that the economy is in pretty owe good shape, and if washington doesn't shoot themselves in the foot in the next two months, which is a possibility, but if they don't, we think the economy is going to do well this year. we think stocks will go higher. inflation is relatively tame, pes relatively low. so even we're at a five-year high, higher and we went down. we think the market is poised to do better over the next year and actually over the next three to five years. >> michael, where are you putting money to work right here
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at a portfolio manager? >> well, we're putting it all over the place because we run a diversified funds so precious metals, shorter-term bonds because of the potential of higher rates and high grade corporates as well as equity markets, both u.s. and non-u.s. in the short term the stock market can outperform while the economy does not, but in the longer term those two things are going to come back to equilibri equilibrium, so, you know, the market is at a high here, corporate earnings in q3 were very weak. i think q4 earnings will tell a lot, and i think the political dynamic coming up in march is going to be interesting. i don't think they will strike a great grand bargain that's going to be, you know, a good thing for markets over a long-term structural basis. i think they are going to do whatever little they can and tweak the edges and fight a lot about it before they do anything so i see sort of anemic growth continuing, and with the higher taxes that have come in to play beginning this year as a result of this deal they cut, plus the
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obama care taxes, those are significant headwinds on economic growth in 2013. >> so you raising cash then, michael? >> we're strategically selling and reapplying in other areas that are beaten down as part of our overall diversified strategy. >> david katz, what do you like best in the market right here? with bank earnings starting today, with wells and you'll get a flood of them next week. that's probably going to set the tone for where the market goes next, right? >> it's going to be both the financials and the industrials as they come in. in terms of what we like for the upcoming year, we think financials which had a very good 2012 are due for a repeat, also for a good year. we don't think the earnings season is going to drive them higher. we think they will start to move higher after the earnings season as they look at the 2013 outlook, not last quarter. also like energy. that was a laggard, we think that's due for a catchup and industrials should also do well in the upcoming year. >> in terms of washington and the dysfunction, how much of an impact are you expecting this debt ceiling debate to have? >> we're quite worried about it.
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we hope they don't shoot themselves in the foot. the good thing is the market saw in december even though there was a lot of fighting, ultimately they did the right thing so maybe it doesn't have to sell off as much before. >> i'm sorry, what does that mean? shoot themselves in the foot? does that mean they should do the right thing and stop borrowing 1 trillion a year. >> michael, you're right. we already shot ourselves in the foot. >> shooting ourselves in the foot would be coming up with a deal before the deadline, not a week after the deadline after they scare the bejabers out of everybo everybody. >> in 2011 they raised the debt ceiling and promised to cut $1.2 trillion. guess what? they punted on that one. now they are one sequestration in arrears. they owe us two and we're not getting any. that's not shooting ourselves in the foot. it's shooting our children in the head. >> i would argue that they did the -- i would argue they absolutely did not do the right thing. they probably should have let things lie and started over for something bill bigger and more
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structural. if you look at the last two years, you've got a tax hike and delayed sequestration of spending cuts. >> right. >> so what did you get? you got a tax hike? i'm not sure that's in the best interest of the economy. >> we'll wrap this up. i'll give you a chance to take back that somewhat uncolorful statement that you just made. >> we don't think you meant it in any literal way. >> i think -- not a time -- >> i think our economic policies are suicidal for the country in the long run. >> okay, all right. thanks, everybody. >> there's a way to make a point and another way to make a point that's all i'm saying. >> just saying. >> the s&p 500 struggling to close at a new five-year high after yesterday's victory above it. bob pisani in the middle of the action. i know you were impressed with the inflow numbers into mutual funds. >> i'm very hopeful, though it's only one week out of the year, but we had the highest inflows in several years in stock mutual funds, etfs continuing to get
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inflows. take a look at materials. china, consumer inflation, much higher than expect the. not good. maybe a less chance of a stimulus so material stocks, like aluminum stocks, take a look at them all on the weak side. some of the iron ore companies concerned that some iron ore prices might are more weaker than anticipated. china stocks, speaking of china. a huge run in the last month. the fxi, the etf for china has had big volume recently. up about 15%, so already people are anticipating china doing better next year. maybe, maybe not, but it's already run there. banks, well, look, a very simple story. you always get a selloff on the first day when the banks start trading. wells fargo came out. wasn't bad. nobody sees any upgrade to see their outlook on wells fargo based on what happens. net interest margins still compressed. loan growth still pretty modest. not bad. just not any reason to keep buying them right now. finally for the week, guys, let's call it digestion. after the great week we had last year, maybe a little digestion is in order.
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back to you. >> all right, bob. thanks so much. have a good weekend. 50 minutes to go before we close it up on this friday. the dow is clinging to a one-point gain. markets aren't moving that much ahead of big earnings. >> big earnings. wells fargo reporting a jump of 24% in fourth-quarter profits. why is the stock down? well, we'll find out what wall street is worried about when we talk with the company ceo. >> apple's show they will become china's biggest market. >> and after the bell the flu sweeping the country. flu shots are selling out. we'll talk about a top farm suital company on the front lines of this scary outbreak.
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welcome back. wells fargo leading the banks lower despite better than expected earnings.
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kayla tausche with more. >> reporter: the heart of the bank do two things, take deposits and reinvest that money as loans to make a return or net interest margin which is the simplest margin of bank profitability. no wonder with wells fargo seeing this metric decline for two straight quarters, rock bottom interest rates is pretty bleak. deposits jumped faster than expected and faster than they could lend them back out and they put it in treasuries and other low risk short-term securities and hence the lower yield, but with all banks in this business it's no wonder the sector is down today, but it's unlikely the problem is the same for other banks since the share of deposits coming into wells fargo has to come from another bank. maria? >> all right, kayla. thanks very much. more now on wells fargo numbers and how things look moving forward with timothy saloon, wells fargo chief executive officer. tim, thanks for joining us on the program. >> thanks for having me. >> we want you to characterize
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what happened in the last three months and tell us how business it. tell us that the mortgage lending business is concerning wall street. what's going on? can you walk us through it? >> sure. we had a terrific quarter, and it was another record quarter for wells fargo. as you mentioned, our earnings were up $5.1 billion, up 24% year over year. earnings per share was up 26% year over year, and at 91 cents that was our 12th consecutive quarter of earnings growth, and our seventh consecutive quarter of record earnings. the good news is that our earnings were very broad-based. our revenue was up 7%. we saw a good loan growth at $17 billion in the quarter across our wholesale and our retail and our wealth management business. we saw very strong deposit growth, as were you talking about, up $50 billion in the quarter. our operating leverage, which was really the true margin of the business pre-tax, pre-provision, was up over $900 million year over year and credits improved so it was a great quarter for us. as it relates to mortgage, the
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mortgage business is terrific, but it's not the primary driver for our earnings. >> but you're making fewer loans. i mean, you don't seem to be addressing i guess what wall street's bigger concerns appear to be today after you beat earnings. the stock is down. they are worried about loan growth, net interest margin was worse than expected. >> you know, fair question. i think when you look at our loan growth, we actually had the strongest quarter of loan growth in the last few years at $17 billion. sure, the net interest was down ten basis points, but the fact of the matter is the primary reason for that was because our deposits grew. that was eight basis points of the ten. we'll take that problem all day long. we love growing deposits because what that dpos does is it grows relationships and grows customers and allows us to grow our fee income over time and you saw that this quarter up 16% year over year. >> looking out over the next couple of quarters and into the next year, how are you going to offset what many are calling
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stubbornly high expenses whether it be the pressure on margins that we're talking about, the net interest margin or really just the expense side of the business with the mortgage settlement continuing to stay at levels that you would, of course, like to be lower? >> well, i would disagree that our expenses are stubbornly high. in fact, if you look at year over year. our operating efficiency improved 190 basis points, and our operating efficiency was well within the guidelines that we had set of 55% to 59%. in fact, when you back out the cost of the independent floesh you're review settlement and the $250 million doe nation that we made to our foundation, our expenses were actually down year over year pretty significantly, and they have been coming down over the last couple of years. >> you discussed expenses on the call, and there were a handful of analysts probing you about higher expenses that you would like to get lower. what went on in the call then, tim? >> well, if you look at our
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expenses on a sequential basis they were up. if you look at run rate, the run rate was about $12 billion. again, if you just look at that run rate, it would put us at the low end of our expense efficiency rate target, close to 55%, 56%, but having said that, we still believe our expenses are high. we continue to want to make improvements in that, but at the same time we don't want to turn away good revenue, and that's what we've been able to accomplish. >> sure. you made a peculiar statement on the call as well that i would love to get you to expand upon. it took a lot of people by surprise when you said that the fiscal cliff was a net positive for loan growth. i think most people would assume the opposite. >> yeah. fair point. what we saw in some of our loan growth was that many of our customers were anticipating the tax changes that were widely discussed in terms of capital gains going up, in terms of
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other tax rates going up, and what happened was some of our customers took out loans to pay dividends. the potential concerns about income tax rates also impacted sales of companies, and we had the opportunity to finance the buyer, so all in all it was a net positive. not a big positive, but a net positive to our loan growth in the quarter. >> yeah. tim, at the rick of being so short term, we talk about the quarter and we really don't want to be that short term, but let me ask you about the business going forward and how you see investors benefiting here. we know you've got the c-car and already submitted the capital plan. a lot of people hoping for or hoping for a dividend increase and more money paid back to shareholders through buybacks. how are you envisioning investor benefits in the next several quarters and couple of years? >> well, maria, you're right. we just submitted our 2013
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capital plan. we have a very good capital plan. we've got a great story to tell. 12 consecutive quarters of earnings growth. reduction and risk across the board. improvement in liquidity, improvement in capital levels. we're well above the minimums that the basl committee has set and the fed has set for us. a great story to tell. in our capital plan we requested an increase in capital return to shareholders. we'll know the answer to that at the end of the quarter. >> we'll leave it there. always nice to have you on the program. so appreciate your time today. >> thanks, maria. thanks, scott. >> timothy sloan. next week, don't miss my exclusive sit-down with the chairman and ceo of wells. john stumpf will be with me at 4:00 p.m. eastern on thursday. final stretch of trading for the day. a market that's a mixed, up search points on the dow drills. >> apple says china will be its
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number one market but can that happen without a less expensive iphone? >> and research in motion has been one of the biggest comeback stories in recent months. the stock up better than 10% today alone. going too far to fast? check it out next on "closing bell." what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office. sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar...
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appleverse about whether the company is preparing to launch a cheaper version of its iphone. jon fortt joins us now to shed some light on the issue, and i guess there were some conflicting stories out there, jon, within the last 24 hours or so. >> yes, indeed, scott, and we'll talk about that. by the way, apple owes china business already huge at $5.7 billion last quarter. that's 16% of apple's total revenue. we know that apple sold more than 2 million iphone 5s in china over its launch weekend in mid-december. last quarter asia-pacific, which doesn't include japan, waspel's third largest reason and i wouldn't be surprised to see it overtake europe for the number two spot. europe did just over 11 billion. if europe drops by a bit and asia surges 45%, which isn't out of the question, asia-pacific all of a sudden is number two. let's talk about those rumors are a low-cost iphone for emerging markets. shanghai evening news claimed the apple marketing chief steve
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shiller says the future for apple isn't cheap phones. apple hasn't responded to my request to clarify what shiller said and frankly i don't trust language that's been translated and retranslated. the future of apple isn't cheap ipads but that doesn't stop them from coming out with ipad minis. you can bet they have worked on a phone that would meet their standards and avoid cannibalizing the high-end iphones. if they release one, that's a bigger story. >> apple stock, a buy or a sell? the stock hovering around $500 a share. still well below its all-time high, so is it a buy or not? on the technical side of the story ennis tanner with me with riskreversal.com and on the tech fundamental side, jeff, we'll start with you.
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>> growth rates in china, it's huge, but i think there's a bigger story here in apple, and we can talk the numbers to death, but there's a transition going on. over the last six years apple has been this hyper growth company with an investor base that included everybody, including your mom, including your aunt and uncles, and now apple is starting to transform into a solid growth company, and that's why we think it's a long-term buy. we're going to see. this quarter coming up is going to be very important, and the growth in china is going to be extremely important but this is going to be a staple because over the next three to five years i know i'm going to get a consistent rate of return with consistent growth. >> is that right? ennis, what do the charts say? >> i think we might be close to a good buying opportunity, but not yet. if we look at one-year chart in ale, you'll see that after the all-time high in the fall the trend changed and if you look at the 50-day moving average you can see it's actually acted and resisted several times over the last few months, and against that you have $500 psychological
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support. that's the obvious important level. for me the stocks at 550 but the tie-breaker is if we compare apple to the s&p 500. apple has had a very strong bid over the last month. against that apple has really struggled. i think in the first pullback that you see, apple will come under pressure. there isn't a demand there. wait for a flush under 500 and that's imminent and that's a great opportunity. >> you want to buy it but not at this level. >> i think you'll see capitulation once it breaks 500 which i think is likely. >> ennis is bringing up good points. if you're a long-term investor, you can't mix out in the next two weeks. >> right. >> if they have an earnings, maria, where they meet or beat expectations, you're going to have a nice 10%, 15% up move, and i want to at least start to accumulate the stock now, and if it drops 13%, ennis, i'd be buying more. >> you're not -- you're not going to pick hairs on this one. >> jeff might be right but it's
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much better to be long from 450 than it is to from 550 or 520. >> all right, gentlemen. we'll be watching. see you soon. >> scott? >> maria, thanks so much. take a look at the averages right now. right now the dow is up 15 point. the s&p and nasdaq looking to hold on to these gains as well as we head into the final stretch. well, your paycheck is a little lighter this week because the social security tax cut was not extended, and up next the former presidential candidate howard dean made a case for why even more of your taxes should be increased to help pay for massive entitlement programs, and he's not talking about just the upper income either. here's something to chew on. while your paycheck gets smaller, your grocery bill is about to rise thanks to smaller than expected crop supplies. how that will impact your wallet and food stocks like general mills later on the "closing bell." tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.
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welcome back. today is pay day for many americans, and if it is, no matter what income bracket you're in, there's a cut to your take home pay that you'll be noticing, and you have the social security tax hike to take a blame. >> if your annual income is $100,000 a year, you're losing close to $80 on a biweekly basis
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out of your paycheck which adds up to $2,000 over a full year. >> yeah. and if you make $60,000 a year, that annual hit to your wallet is about $1,200. howard dean says to really fix our entitlement problems, we need even broader tax hikes than that and not the so-called rich by caroline hellman of occidental college would like to see other solutions before raising taxes on the middle class. thanks so much for joining us. howard, let me start with you. if americans want to keep their entitlements, they all need to pay more, and that's through higher taxes on all income levels. >> first of all, we have to understand the difference between plain old spending and ent times. what you just talked about is the restoration of the payroll tax to what it was when clinton was president, actually when george w. bush was president as well. that was one of the very few times where there was a direct connection between taxes and social security. what they did was borrow money to give you a tax cut, that's literally what they did because
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the social security fund, of course, has to be made whole. now they are taking that money back. that's reasonable. the truth is though if you want benefits you have to pay for them, and the so-called taxing the rich, which i approve of because i think clinton's tax rates were much better for the country than bush's tax rates, but taxing the rich alone doesn't solve this problem. we have to cut spending a lot and everybody's tax rates have to go back to where they were when bill clinton was president and we might be lucky enough to have the economy. >> wasn't this a different time, can you compare both economic landscapes? >> you sure can. >> that was in the 509d 0s. we have the dotcom boom, a lot of money invested in technology. it wasn't really just the fact that it was higher tax rates. you can't just say that that was why the economy did well. >> what it was, here's -- here's what really started us off into trouble. 60% of the component of the deficit when barack obama took
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office was because of the bush tax cuts. they were never paid for. the same problem with politics in both parties. the republicans want to cut taxes, but they don't have the nerve to cut the programs to pay for them. the democrats want to spend more money so they don't want to raise money to pay for them. >> caroline, what's the best answers here? >> we haven't looked enough at military cuts. >> yeah. >> we could make drastic cuts in military spending, get out of afghanistan and iraq and immediately at least stabilize the budget and at least our deficits at 73% of gdp for the next foreseeable future and that would give us time to make structural changes to health care and to medicare and to social security that knight might need to be made but the fact is we have actually had the greatest reduction in our deficits in the past three-year stretch since any period since world war ii and what's really happening is revenue. we need to increase revenue so we're pretty stable at this point. we have to cut a bit more with military spending and then we
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really have to go after revenue which needs more people need to be employed so i don't agree with dr. dean we node to raise taxes on everyone. we need to get everyone back to work. >> well, that's certainly what one of the goals i guess should be. let me ask you to stay right there. want to get to eamon javers. he has breaking news, and i want to get your take on it. >> reporter: a new letter now to barack obama, president barack obama from four key democratic senators here urging the president not to negotiate with republicans over raising the nation's debt ceiling, but take a listen to how they express this. they say we believe you must be willing to take any lawful steps to ensure that america does not break its promises and trigger a global economic crisis without congressional approval, if necessary. high ranking democratic senators signing this including harry reid, dick durbin, chuck schumer and patty murray so there the democrats seem to be signaling to the president and shoring up his left flank that they are
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willing for him to take extraordinary measures to avoid breaking through the debt ceiling, that is, if republicans don't agree to raise the debt ceiling. they would like the president to do almost anything he can, including what -- apparently what they call the constitutional option which is the 14th amendment in which the president would simply say that it's unconstitutional not to honor the nation's debt and simply refuse to go along with the debt ceiling itself. maria? >> all right. eamon, thanks very much. >> howard, given what eamon just reported and the fact that you made the statement that we need to cut spending a lot with the emif a sis on a lot, it doesn't sound like the president isn't ready to listen to you. >> when they did the fiscal cliff deal which was a relative nothing, raised a lot of taxes and didn't cut any spending. >> exactly. >> so when they did that deal, they kicked the cuts -- the cuts in the pentagon and the human services $1.2 trillion down the road for two months, so there may yet be a ton of spending
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cuts. that's what i'm hoping for, and i think -- i think the suggestion that there's got to be some significant pentagon spending cuts is exactly right. it hasn't been done for about 30 years and a lot of money in the pentagon budget is not asked for by the military, by congress people who have plants in their districts so, you know, there's a lot of room for cutting here. i agree with that. >> why aren't we doing any cuting? it seems like the -- >> nobody has the nerve. >> constantly surrounds tax increases, but even this, you know, with the top dems sending this letter to the president saying we believe that you've got to be willing to make -- take steps to ensure america doesn't break the promises and do not negotiate over the debt ceiling, it's all about, you know, stick to your way and don't negotiate. how come we're not just admitting what the issue is and just coming up with spending cut ideas? >> because nobody wants to cut spending on either side of the aisle. >> it's extraordinary. >> nobody wants to cut spending. they all say they do. >> but the republicans do. >> that's what they say.
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>> republicans do. >> they didn't do it. they just agreed to a big fat bill that didn't cut any spending. >> well, they had -- they had no leverage really at the end of the day. >> midnight on newyears day. >> i was advocating that we go right over the fiscal cliff and cut $1.2 trillion of spending and that's what we should have done. >> wow. >> caroline, what do you make of the letter sent by the four top dems to the president saying don't negotiate on the debt ceiling? >> we've raised the debt ceiling about 70 times in the past century and this has never been a controversial issue. granted we do have a $16 trillion debt at this point in time so it makes it more prescient that we do this now but i completely disagree we should have gone over the fiscal cliff. we don't have a spending problem. we primarily have a revenue problem. >> wait a second. how could you say we don't have a spending problem and it's a revenue problem. you could raise taxes by 80% on the rich and you're still not making a debt into 16 trillion. this is not a revenue problem. >> sure. it's absolutely a revenue
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problem. if you look at what caused this, talking about extension of the bush tax cuts primarily for the wealthy and we're talking about getting into wars we couldn't afford. >> caroline, how much revenue are you talking about? add it up. it's not making a debt into $16 trillion in debt. so if you really want to make a dent in it you've got to stop the crazy spending. >> we want to make a dent in it we need to bring unemployment so people are less dependant on social services and their tax dollars are going into the coffers. look at 2000, what was happening in the year 2000. if we return to that level, we would be fine now. the problem is that wall street tanked our economy, they got a bailout and main street didn't get a bailout and now you're asking taxpayers to bear this burden. it's not fair. >> let me just thank the cnbc bookers for getting somebody on who is to my left. this almost never happens, and i really appreciate it. >> and i'm agreeing with you, howard. >> exactly. >> we're not -- i am in the middle on this one. i think we have to do both. i do agree that the bush tax cuts, according to the cbo are
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60% of the problem. 40% of the problem is spending. let's talk for a minute about medicare which is the biggest problem. you don't need to cut benefits to fix this problem. what you need to do is something the whole health care system does, needs to do, and that is pay by the patient and stop paying by the procedure. right now everything inedicine is designed to drive up costs as fast as possible. you need to change the way we pay hospitals and providers. that will fix that problem. that's -- that's entitlement reform. entitlement reform is a dirt owe word among my end of the political spectrum because people think that means you cut social security and medicare. you don't have to make those benefit cuts, but you do have to change the way that we pay people. there is a spending problem. >> if the president's health care legislation, obama care do what, did obama care accomplished? >> what romney accomplished in massachusetts. >> what? >> we're going to much closer to universal health care and that's very good, but neither governor romney or president obama has paid for their program. >> all right, guys. i guess we'll wrap it up there.
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>> yeah. >> thanks very much. we'll -- this is -- that was a great debate. appreciate, it howard and caroline, thank you. final stretch of trading. 20 minutes before the closing bell sounds on wall street. >> so will it or won't it as the s&p is fighting to end a week at a five-year high. the drama of how this week ends as we tick down to the closing bell with two top money men next. >> the flu hitting the nation hard. dealing with vaccine shortages. we'll speak to the head of kun of the world's biggest vaccine-makers. about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪
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welcome back. final stretch here. less than 20 minutes away from the closing bell. for the first week in trading in 2013, up for the record books. according to a bank of america/merrill lynch report, u.s. equity funds saw the biggest surge of inflows, $19 billion. that was 9 biggest since 2008. money going back into mutual funds. >> yeah. what does all of this stay about the health of the investor and the market? let's ask david darst of morgan stanley wealth management and kyle harrington from harrington capital management. david, i'll begin with you. is that a bullish sign? >> definitely a bullish sign. as you know, the first week of january has an 85% accuracy rating in terms of calling how the year ends up. january as a whole has a 76%
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rating. i would -- i'm amazed at the master limited partnership, scott. they are up 7.6%. the leading sector is your health care stocks. they are up 4.5%, a little bit -- the stock market is up about 3% for the month, so you've got a very month to date, got a very, very good start to the year. housing, automobiles, okay? consumer confidence, so you want to see the profits come through. then the market can advance. >> that's a wild card. >> how but, kyle? how do you see things? >> to david's point about the month, the month looks good. health care, technology, my areas of focus for this year in terms of alpha creation for individuals. we represent a lot of individuals, family offices that we manage wealth for. those are the areas that we'll allocate funds to in an effort to get outsized alpha returns. >> great china. china's export numbers you saw come in at 14%. >> yeah, they were good.
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>> year over year, previous month, 2.7%, so china looks like it's picking up. china was up 3% for the year. 15% in the month of december. they were minus 12 through november. they came on very strong, so you want to look at china, japan, master limited partnerships and health care. >> maria's made the point over the last few days that the market feels like it wants to go higher. i don't think anybody will argue with that, but what needs to help that sentiment push the market higher? what's the catalyst? >> profits, personal income. you want to see these people earn more, own more, work more and more jobs created so you get that kicking in, plus -- and this quarterly earnings for the fourth quarter, how are management talking about the year ahead? that to me is going to give a sign post. >> we're not seeing that though. >> 47% bulls in the week ending january 10th on this investor survey. 47% bulls. long-term average is 39%, so we're a little bit ahead of
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ourselves, scott. want to see this confirmed by management, profit, production and personal income, the three ps. >> not seeing that confirmed so far. fourth quarter is supposed to be anemic earnings. >> want to add to that about scott's point about pushing the market higher. i think d.c. clarity, clarity coming out of d.c. with respect to the debt ceiling issue i think always will create loss volatility in the market and drive it higher. >> what about the idea that we've got all this money on the sidelines, but that's the reason that this market keeps going higher, that and, of course this, easy policy by ben bernanke. it's not necessarily based on fundamentals, not the guidance that you like to hear or the strong earnings that you like to see. >> that's right. you make a point, david, about profits, and i agree. i think that has to run now in coordination with d.c. having legislative policy that's in place and that creates a sentiment of security within the investing public. >> this is a where's the beef type of market right here. this is a very important tipping
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point. the biggest things driving the market last year were things that did not happen. no greece exit, no china hard landing, for u.s. double dip recession and add that with the monetary stimulus. that's what pushed the market up. what we need to fill the tank with profits. otherwise we're driving on fumes right now. >> jeremy segal, who i spoke with earlier today thinks we're going to hit record highs, that we're going to have multiple expansion, that earnings are going to come in well over 100 bucks. >> well, there aren't any alternatives to u.s. equities. i mean, that's one of the issues here, right? with rates where they are, where else is the money going to go? >> you've got -- i think you've got very little competition, maria, from bonds, 2% yield on bond, less than 2%. basically the commodities did not do much last year, so you've got a tremendous compelling valuation case. the key thing is the confidence and confidence comes from leadership and leadership comes from predictable, and if we
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could get some more predi predictability out of congress, can you see the multiple expansion got. >> more than ever this coming year you get with an adviser that you trust to help you identify whether etfs, mutual funds, individual securities in specific areas and go with a game plan. >> thanks very much. good to see you. have a good weekend. >> ten minutes to go before we close up the week on wall street. dow holding on to a 20-point gain and s&p sitting at a new five-year high or at least flirting with that level. >> coming up. steve liesman looks into his critical ball and tells us what he sees ahead for fed chairman -- would it be fed chairman timothy geithner? tim is here to explain what he thinks tim geithner's next move is after treasury. >> forget the banks. the face's wealthier are increasingly turning to pawn shops for revolving lines of personal and business credit. details from this booming business from our very own jane wells a little later on in the "closing bell."
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treasury secretary timothy geithner will formally step down two weeks from today, so what's next for him? steve liesman is here with an interesting take. steve? >> reporter: thanks, maria. geithner will stay at treasury until january 25th. unclear if that's going to mean a seamless transition with the
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president's nominee jack lew since it seems unlikely at this point lew will be confirmed by the senate before geithner leaves. so maybe the deputy secretary will fill that gap. geithner, if he wants one, can have almost any finance job that he wants. he'll take at least six months to consider his option. they don't say whether or not he wants to go into finance. the question is what kind of job would be appropriate for geithner to take given that he was intimately involved in bank rescue operations over the past several years? and what kind of job could he take in the post-crisis world and still be eligible to come back into government if he wanted? fed chairman ben bernanke, he's expected to move on after his term expires in 2014, and geithner would clearly be someone the president would consider. according to sources, geithner wouldn't want the job but the president has been very successful in getting geithner to do things he hasn't wanted to, like stay on treasury for an extra year or two and geitner has been making about $200,000 a year and also computing back and forth to new york so it might be a time he would consider to make
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a little extra money. >> that's what i was thinking, he would go into business, but then again when you started reporting, you know, there's this idea that maybe chairman of the federal reserve, i started to think, well, why would he go into business? his entire career has been government. >> that's right. i have to say i'm not violating any confidence. he's very often spoken to me about the benefit that he gets from that public service. he says people really underrate the value of the public service. he's been at the imf, the treasury and then back at the treasury so he's done a lot of that stuff, maria. my guess is that's where his heart is. >> steve, first of all, love the beard. second of all. >> beard? >> could he -- >> shave three times a day. >> you're so bad. >> come on, it's friday. geithner is not exactly the most popular guy on capitol hill, and heied have to be confirmed by the senate which that could be contentious to say the least. >> right. >> oh, absolutely. i'm not saying it would be easy. i think he didn't -- he was confirmed with 34 nay votes i
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believe for treasury secretary. i think geithner could get through as fed chairman. again, the question is does he want it, and the question is given that it's a next-year event, scott, is there enough time for him to spend a little time in the private sector? my guess is to say no, but the question is whether or not the president would be in the same situation where he'd have to call up and say, tim, i need you again on this one. >> all right, steve, we'll be watching. >> only kidding, steve, right? >> that's fine. >> having a great day there. scott, i've been insulted much worse by much better. >> closing countdown is next. >> closing countdown next. stay with us. >> save me from myself. >> talking about the vaccine shortage. >> that's right. it is making this year's flu outbreak even worse, so when could more treatments hit the market? we're going to hear from one of the world's largest flu vaccine-makers. >> and here's the way to help fix our massive debt problem. the man behind a new study to show how the u.s. could save $2 trillion in health care spending over the next decade.
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you're watching the "closing bell" on cnbc, first in business worldwide. actured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com. ♪ [ male announcer ] some day, your life will flash before your eyes. make it worth watching. introducing the 2013 lexus ls. an entirely new pursuit.
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♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. welcome back to the floor of the new york stock exchange and time for the friday edition of the closing countdown. wells fargo kicking off the big bank earnings today. earnings better than expected. loan growth though really concerned the street and then how much money the bank actually makes off of those

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